Hayes seeks to build upon Microsoft's federal success

By John Monroe

Mar 16, 1997

When Peter B. Hayes came to Washington D.C. to become general manager of Microsoft Corp.'s federal district earlier this month he assumed control of one of the most successful divisions in one of the most successful businesses in the world.

Hayes replaces Phil Lavery who recently left the federal district to head up the Microsoft team that is working on creating a strategic alliance with Hewlett-Packard Co.

Unlike many cases where new executives are brought in to make major course changes Hayes who joined Microsoft in 1991 finds himself in a position where his first task is to capitalize on the organization's ongoing successes.

This organization "really has the type of model a lot of [Microsoft offices] want to follow for large accounts " Hayes said. In fact "we are trying to take a lot of things that have worked here and move them into other accounts " he said.

Given Microsoft's dominance of the desktop software market the federal government accounts for a relatively small percentage of the company's overall business. On the other hand the federal market makes up about 25 percent of Microsoft's "enterprise" business with federal customers providing eight or nine of the company's largest accounts Hayes said.

Enterprise accounts were the primary focus for Hayes before coming to Washington. After several years as manager of Microsoft's southeast district in Atlanta and a stint as director of the company's field and customer relations organization Hayes has overseen Microsoft's worldwide enterprise field strategy for Microsoft's enterprise customer unit in Redmond Wash.

In that position Hayes has had a chance to travel around the world and talk with different units about their strategies for enterprise accounts. But the federal district "is the place that has been doing [enterprise business] the longest and best " Hayes said.

Among other things Microsoft Federal has done a good job of creating a stable sales team that works with the same customers over a long period of time and really learns their requirements. For example the last two men in Hayes' position - Paul Burden and Lavery - each had worked in the federal district a decade or longer.

That is an approach Hayes is familiar with after working a dozen years in sales and other positions at IBM Corp. "IBM has really done a good job of trying to understand what the customer needs that's something the folks in the [Microsoft] federal district have really learned " Hayes said.

Microsoft also has fostered good relationships with systems integrators and channel partners. That will continue to be the company's primary sales strategy in the federal market Hayes said.

That is not to say that Hayes does not plan to make any changes. Microsoft like every other company is adjusting to changes in how federal agencies buy and use technology. For example the size of the company's contracts group which focuses on indefinite-delivery indefinite-quantity contracts may shrink somewhat in the long run as federal agencies buy more and more products off the General Services Administration schedule contracts Hayes said.

Additionally Microsoft's federal operation will continue to staff up its consulting business which helps Microsoft customers make the fullest use of its software products. "We don't have the kind of business model where we are going to generate a lot of revenue on the [consulting] side " Hayes said. "Our job is to drive the software business and do whatever we can to" support its partners and customers he said.And Microsoft like a lot of other vendors is "still formulating" its strategy for blanket purchase agreements in which agencies establish open-ended buying agreements with product suppliers based on the GSA schedule prices.

But for now Hayes is beginning the process of settling into his new position. Over the next three months "my main goal is to meet customers and to learn the federal government business " he said. By the summer he expects to have a better feel for the market and an idea of what changes he might want to make.But in light of the company's continued success "there are no distinct course corrections to make " Hayes said.